China has announced an increase of more than 12% in its defence budget, to be approved by a session of its parliament that opens on Saturday.
China's military has been modernising rapidly
The rise comes as parliament is set to debate a so called "anti-secession law", aimed at curbing any bid by Taiwan for formal independence.
China views Taiwan as its territory, and regularly threatens to use force if the island declared independence.
The defence spending hike may renew US concerns at China's military ambitions.
Friday's announcement is the latest in a series of regular cash infusions to try to upgrade and modernise China's army.
But Jiang Enzhu, a spokesman for China's parliament, played down the significance of the rise, which will take official military spending to 247.7bn yuan ($29.9bn).
2005 official budget of $30bn, though analysts say real figure is much higher
Compares to $400bn for US
China has world's largest standing army - 2.5m members
Plans to cut 200,000 troops
Spending instead on high-tech weapons, many from Russia
He said the money would help pay for more training and modern weapons, but stressed that much of it was needed to boost soldiers' pay and cover the social costs of cutting 200,000 personnel.
He added that China's defence spending was far lower than that of other major powers.
However, many hawkish voices on China in the US administration believe that Beijing's figures may understate the real level of military spending.
A BBC correspondent in Beijing, Francis Markus, says they are concerned about the impact of Europe's moves towards lifting an arms embargo on China and they are closely watching a new anti-secession law set to be passed by the Chinese parliament - the National People's Congress.
That will underpin Beijing's drive for peaceful reunification with Taiwan and set out a red line against moves by the island towards formal independence.
Mr Jiang stressed in his news conference that it was not a "war mobilisation order".
But he also warned: "Taiwan independence forces and their adventurous moves have seriously threatened China's state sovereignty and territorial integrity."
Security is tight in Beijing
The anti-secession law will be addressed in a speech by NPC Vice Chairman Wang Zhaoguo on Tuesday. And analysts will also watch for any mention of it during Premier Wen Jiabao's work report on Saturday.
The political future of Hong Kong Chief Executive Tung Chee-hwa, whom Hong Kong papers say is set to retire, will also be in the spotlight.
Mr Tung, who is in Beijing for the meeting of the advisory body to the NPC, the CPPCC, is expected to meet Chinese President Hu Jintao on Saturday afternoon and probably return to Hong Kong on Sunday, a government source told Reuters news agency
Friday marked the formal resignation of another political leader - former Chinese President Jiang Zemin. He stood down from the last of his posts - chairman of the state Central Military Commission, a largely ceremonial panel.
As is usual for China's annual parliamentary session, security is tight in the capital.
Cars are searched as they enter Beijing, and there is a ban on hot air balloons, model aircraft and paragliders.
"More than 650,000 people will stand guard and go on patrol on the city's streets and lanes every day to guarantee security," the Legal Evening Post quoted a Public Security Bureau official as saying.